Vietnam: What are the changes in the applicable region-based minimum wages in 2021?

Vietnam: What are the changes in the applicable region-based minimum wages in 2021? (Illustration)

1. The applicable region-based minimum wages in 2021 will be determined by region and set monthly and hourly

Under Article 91 of the Labor Code 2019 effective from January 1, 2021, statutory minimum wages are minimum wages of workers who do the simplest jobs in normal working conditions that are sufficient to support themselves and their families, and appropriate for socio-economic development.

Statutory minimum wages per month or per hour vary according to regions.

Meanwhile, Article 91 of the Labor Code 2012 stipulates that statutory minimum wages must be determined on a monthly, daily and hourly basis by region or sector.

Thus, on January 1, 2021, when the Labor Code 2019 takes effect, the region-based minimum wages in 2021 will be determined by region and set monthly and hourly and will no longer be determined on a monthly, daily and hourly basis by region or sector as current regulations.

Additionally, the Labor Code 2019 clearly stipulates that the Government of Vietnam will decide and announce the statutory minimum wages on the basis of proposals of the National Salary Council, abolition of the provisions for sector-based minimum wages determined through sector collective bargaining, as stipulated in sectoral collective agreements but not lower than the region-based minimum wages per the previous Labor Code 2012.

At the same time, the Labor Code 2019 also details the bases for adjusting the region-based minimum wages in Vietnam, including:

- minimum living standards of workers and their families; 
- the relation between statutory minimum wages and usual salaries; 
- consumer price index, economy growth rate; 
- labor supply and demand, productivity and financial capacity of enterprises.

2. Expected: The applicable region-based minimum wages in 2021 of Vietnam will remain the same as in 2020

At the meeting on August 5, 2020, the National Salary Council voted on the plan: "Continue to implement the region-based minimum wages monthly until the end of 2021 (with no adjustment in 2021). At the same time, the applicable hourly statutory minimum wages in 2021 will not be issued to synchronize the monthly statutory minimum wages." This plan has been submitted to the Government of Vietnam for consideration and decision. It is expected that the applicable region-based minimum wages in 2021 will remain unchanged compared to 2020.

Therefore, the applicable region-based minimum wages in 2021 are expected to follow the provisions of Decree 90/2019/ND-CP of the Government of Vietnam on the region-based minimum wages applicable to employees in Vietnam. Specifically, Article 3 of Decree 90/2019/ND-CP stipulates the region-based minimum wages applicable to employees working in enterprises as follows:

- VND 4,420,000/month, applicable to enterprises operating in Region I;

- VND 3,920,000/month, applicable to enterprises operating in Region II;

- VND 3,430,000/month, applicable to enterprises operating in Region III;

- VND 3,070,000/month, applicable to enterprises operating in Region IV.

Note: The region-specific minimum wages apply based on administrative divisions at the district, town, and provincial city levels.

Customers and members may see the detailed article: Region-based minimum wages in 2021 for 63 provinces and municipalities in Vietnam (Expected).

Le Vy

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